CRISIS IN THE BALKANS: THE SERBS; Bombing Unites Serb Army As It Debilitates Economy -- Production Cut in Half, Experts Say

The Zastava factory in Kragujevac made cars and trucks, as well as munitions. NATO strikes destroyed it completely, putting more than 15,000 people out of work, plus an additional 40,000 who worked at 120 subcontractors.

The Sloboda factory in Cacak made vacuum cleaners and ovens, as well as ammunition. In five NATO raids, the factory has been ruined, and 5,000 people are out of work.

In Krusevac, the 14 Oktobar factory made heavy construction equipment and bulldozers, as well as reconditioning tank engines. NATO bombs have left it a complete ruin, putting more than 7,000 people out of their jobs, a quarter of the town's work force.

The oil industry, a profitable part of the economy and a prime candidate for early privatization, has been almost completely devastated, with the two refineries in Yugoslavia blasted, and most of their storage tanks exploded.

The five-week air campaign, intended to change President Slobodan Milosevic's policies toward the southern Serbian province of Kosovo, is also destroying the country's civilian industrial capacity and public works, including its highway, rail and communications networks.

The air war has halved economic output and thrown more than 100,000 people out of work, Western-trained and independent economists said.

Although it is difficult to estimate the cost of replacements and repairs if the war stops today, the economists said, the damage has had greater effects on the gross domestic product than the Nazi and, then, the Allied bombing of Yugoslavia, which was a much more rural country in World War II.

The bombing has added to the problems of the past decade like economic mismanagement, cronyism, the hyperinflation of 1992 and 1993, the Bosnian war trade embargo from 1992 to 1995, eight years of virtually no foreign investment and almost constant war.

''Politics aside, this is an economic and humanitarian catastrophe,'' Mladjan Dinkic, a professor of economics at Belgrade University, said. ''While the Serbs won't die of hunger -- agricultural production will continue, even without fertilizers -- our industrial base will be destroyed and the size of the economy cut in half.''

Professor Dinkic coordinates the Group 17 of economists, some from the International Monetary Fund and the World Bank, who had American financing to promote a market economy. They estimate that gross domestic product per capita, $3,000 in 1989, before the economic sanctions began in May 1992, dropped to $1,650 in 1997. In view of the large black market, that figure was probably closer to $2,000, Professor Dinkic said. It will drop below $1,000 if the war stops now, he said. And unemployment, officially 27 percent last year, is quite likely to double, he added, with up to 500,000 people laid off or out of work and 100,000 or so seeking to emigrate from a country of 10 million people.

Though he readily concedes that considerable guesswork goes into all the figures -- damage estimates range from $40 billion to $100 billion -- Professor Dinkic said however the war ended the future would be difficult.

NATO says its raids are intended to force Mr. Milosevic to change his policies in Kosovo and to ''degrade and destroy'' the military ability to carry them out. But more and more, NATO is ignoring the civilian-military distinction. It is going after ''high value targets'' that are dear to Mr. Milosevic, his Government, his family and his friends, who control sectors like cigarette production.

But targets like a cigarette factory in Nis that NATO recently destroyed are not essentially military, but civilian or psychological. The lines for cigarettes are now enormous in Belgrade, and that may be NATO's point. And NATO officials will be pleased with the new limits on gasoline rations, which were cut on Tuesday, from 10 gallons a month to 5.

Although markets are still full of produce, people worry, too, about the quality of that food and the produce being grown. Fertilizer plants have been bombed, as have chemical plants that are said to be spewing toxic fumes.

The Serbian Environment Minister, Branislav Lazic, said today that large quantities of chlorine and other noxious gases had been released into the air because of the bombing of a refinery and petrochemical plant at Pancevo, 10 miles northeast of here.

The environmental consequences of the bombing ''knows no borders,'' Mr. Lazic said, warning that the damage may be felt in other parts of the Balkans and elsewhere in Europe.

There is no question that ordinary people in this capital are increasingly nervous about how long the war will continue and what will remain of Yugoslavia when it ends. The Deputy Prime Minister who was discharged on Wednesday, Vuk Draskovic, spoke for many people when he urged a settlement, saying:

''People who lead this country must say clearly where we stand. They must say what will be left of Serbia in 20 days if the bombing continues.''

But few here said Mr. Milosevic would feel significant pressure from executives to stop the war, because their positions depend on his. In a statement, Group 17 criticized NATO for punishing the entire nation, and not just Mr. Milosevic. The economists said destroying the civilian economy ''causes no material and even political damage to Mr. Milosevic, but only to the citizens of Yugoslavia.''

After the war, Professor Dinkic said, Yugoslavia will depend on imported oil and gasoline and will be unable to rebuild its industrial sector, let alone its bridges, without significant aid from the very countries of the advanced West that are now bombing it, Mr. Dinkic said.

If the war ends with a clear NATO victory, international aid and investment will be vital for any recovery. But foreign investors will not be very likely to invest much money in a country without functioning road and rail networks, a European diplomat who specializes in economics said.

''The roads and bridges have to come first,'' the diplomat said. But he noted that with ruined factories like 14 Oktobar, even the capacity to produce the equipment required to rebuild bridges, airports and roads has gone.